Agenda Item # Page #

TO: CHAIR AND MEMBERS BOARD OF CONTROL

MEETING ON SEPTEMBER 29,2010

FROM:

LOAN AGREEMENT APPROVAL FOR GUARANTEE OF LOAN 11 SUBJECT: I BETWEEN LIBRO FINANCIAL GROUP AND THE GRAND THEATRE

MIKE TURNER DEPUTY CITY TREASURER

RECOMMENDATION

That, on the recommendation of the Deputy City Treasurer, the attached proposed by-law (Attachment A) BE INTRODUCED at the Municipal Council meeting of October 4,2010:

TO APPROVE the Loan Agreement to be entered into with the Grand Theatre, The Grand Theatre Foundation and The Corporation of the City of London with respect to a guarantee from the Corporation of the City of London to Libro Financial Group as security for a loan from Libro Financial Group to the Grand Theatre in the amount of $750,000; TO APPROVE the Guarantee and Postponement of Claim to be entered into by The Corporation of the City of London and made to Libro Financial Group, as securitv for a loan from Libro Financial Grouo to the Grand Theatre in the amount

(a)

(b)

of $756,000; and TO AUTHORIZE the Mayor and Citv Clerk to execute the Agreement in (a) above (C) . . . , and to execute the Guarantee and Postponement of Claim in-(b) above.

I- ~

PREVIOUS REPORTS PERTINENT TO THIS MATTER

Board of Control Report, Grand Theatre Loan Guarantee, July 4,2000 Board of Control Report, Grand Theatre Loan Guarantee, September 24, 2008

BACKGROUND

On July 4, 2000, Municipal Council resolved to provide The Grand Theatre Foundation with a loan guarantee totalling $1 .I million, in order to refinance existing debt and provide sufficient funding to make necessary capital improvements to the Grand Theatre building.

An agreement was signed December 7, 2000 between the Grand Theatre (the Borrower), The Grand Theatre Foundation (the Owner) and The City (the Guarantor) providing a guarantee of $1.1 million, supported by a first charge on the Grand Theatre building, a general security agreement securing certain personal property of the Borrower and the Owner, and covenants that would not permit further encumbrances without first obtaining the written consent of the Guarantor.

On September 29, 2008, Council approved an amendment to the loan guarantee dated December 7, 2000, provided on behalf of the Grand Theatre and The Grand Theatre Foundation, maintaining the limit for 2008 at the December 31, 2005 commitment of $750,000 and continuing that limit for a period of I O years.

The Grand Theatre is changing financial institutions from the Bank of Nova Scotia to Libro Financial Group and has requested that the City of London act as a guarantor on the loan from Libro Financial Group to the Grand Theatre. This will be supported by a first charge on the Grand Theatre building, a general security agreement securing certain personal property of the Borrower and the Owner, and covenants that would not permit further encumbrances without first obtaining the written consent of the Guarantor. The Loan Agreement between Grand Theatre, The Grand Theatre Foundation and the Corporation of the City of London is attached to the by-law as Appendix A. The Guarantee and Postponement of Claim document is attached to the by-law as Appendix B.

Agenda Item # Page #

The Corporation of the City of London has the authority to guarantee a loan under section 107 of the Municipal Act, 2001, S.O. 2001, c.25 (the "Municipal Act") which provides for the following general power to make grants "despite any provision of this or any other Act relating to the giving of grants or aid by a municipality, subject to section 106, a municipality may make grants, on such terms as to security and otherwise as the council considers appropriate, to any person, group or body, including a fund, within or outside the boundaries of the municipality for any purpose that council considers to be in the interests of the municipality". Subsection 107(2)(a) provides that the power to make a grant includes the power to guarantee a loan.

Subsection 106(1) of the Municipal Act states that despite any Act, a municipality shall not assist directly or indirectly any manufacturing business or other industry or commercial enterprise through the granting of bonuses for that purpose. Subsection 106(2)(b) provides that the municipality shall not grant assistance by guaranteeing borrowing.

The Corporation of the City of London may guarantee the loan to the Grand Theatre if Council is of the opinion that the purpose is in the interests of the municipality. The guaranteeing of the loan shall be considered a grant pursuant to section 107 of the Municipal Act in recognition of the civic pride and prestige that the Grand Theatre brings to the City of London and the fact that the Grand Theatre is not a commercial enterprise

Acknowledgements This report was prepared with assistance from Jennifer Smout and Lynn Marshall, City Solicitor's Office and McKenzie Lake Lawyers LLP.

RECOMMENDED B Y !I

MIKE TURNER DEPUTY CITY TREASURER

C: M. Hayward R. Armistead

Attachment A

Bill No. 201 0

By-law No.

A By-law to approve a Loan Agreement between Grand Theatre, The Grand Theatre Foundation and The Corporation of the City of London, and to approve a Guarantee and Postponement of Claim, with respect to a guarantee from The Corporation of the City of London to Libro Financial Group; and to authorize the Mayor and the City Clerk to execute the Loan Agreement, Guarantee and Postponement of Claim.

WHEREAS subsection 5(3) of the Municipal Act, 2001, S.O. 2001, c. 25, as amended, provides that a municipal power shall be exercised by by-law;

AND WHEREAS section 9 of the Municipal Act, 2001 provides that a municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act;

AND WHEREAS section 10 of the Municipal Act, 2001 provides that the City may provide any service or thing that the City considers necessary or desirable for the public, and may pass by-laws respecting same, and respecting economic, social and environmental well-being of the City, and the financial management of the City;

NOW THEREFORE the Municipal Council of The Corporation of the City of London enacts as follows:

1. The Loan Agreement to be entered into between Grand Theatre, The Grand Theatre Foundation and The Corporation of the City of London with respect to a guarantee from The Corporation of the City of London to Libro Financial Group as security for a loan from Libro Financial Group to Grand Theatre in the amount of $750,000.00 attached as Appendix A to this by-law, is approved.

2. The Guarantee and Postponement of Claim to be entered into by The Corporation of the City of London and made to Libro Financial Group, as security for a loan from Libro Financial Group to Grand Theatre in the amount of $750,000 attached as Appendix B to this by-law, is approved.

3. The Mayor and the City Clerk are authorized to execute the Loan Agreement approved under section 1 above and the Guarantee and Postponement of Claim approved under section 2 above.

4. This by-law shall come into force and effect on the day it is passed.

PASSED in Open Council ,2010

Anne Marie DeCicco-Best Mayor

Catharine Saunders City Clerk

First reading - Second reading - Third reading -

M I S AGREEMENT made as ofthis 5' day of October, 2010. AppetldKA

AMONG: GRANDMEATRE a corporation incorporated under the laws of the Province of Ontario

(hereinafter referred to as the "Borxnnrer")

OF THE FIRST PART - and -

M E GRAND THEATRE FOUNDATION a corporation incorporated under the laws of the Province of Ontario

(hereinafter referred to as the "Ownet")

OF THE SECOND PART - and

THE CORPORATION OF THE CITY OF LONDON, a corporation incorporated underthe laws of the Province of Ontario (hereinafter referred to as the "Guarantot")

OF THE THIRD PART RECITALS:

A. The Bomwer desires to refinance its existing Bank of Nova Scotia credit facilities (the "BNS Indebtedness") with a new financial institution, namely Libro Financial Group (the "Lender");

The Borrower has arranged new credt facilities with the Lender aggregating up to the principal sum of Seven Hundred and FiRy Thousand Dollars ($750,000.00) in accordance with the terms of a Commitment Letter dated August 25, 2010, signed by the Bowower on August 30,2010 (the Theatre Loan") and the Owner has ananged new credit facilities with the Lender aggregating up to the principal sum of Seven Hundred Thousand dollars ($700,000.00) in accordance with the terms of a Commitment Letter dated August 25, 2010, signed by the Owner on August 30,2010 (the "Foundation Loan") (the Theatre Loan and the Foundation Loan shall be referred to herein as the "Libm Loan");

The Guarantor has agreed to guarantee the Theatre Loan (the "Guarantee") in the amount of Seven Hundred and FiRy Thousand ($750,000.00) Dollars on the understanding that the Guarantor will receive various commitments, warranties, guarantees, indemnities and securities from the Owner and Borrower, which are related corporations, as provided for herein, including:

(i) a comrate guarantee ofthe Owner in favour ofthe Guarantor auaranteeing any

B.

C.

., debts and libilities the Guarantor incurs under the Guarantee-

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(ii) a first charge in the amount of Seven Hundred and Fifty Thousand Dollars ($750,000.00) in favour ofthe Guarantor (the "First Mortgage") to be registered on title to the property legally described in Schedule "A" (the "Property");

(iii) a general searrity agreement (the "GSA'j creating a firstranking security interest in favour ofthe Guarantor in all present arid after-aquired personal property of the Bohower and ofthe Owner other than accounts redbeable, inventory arid equipment referenced in Schedule "E;

(iV) copies of good and vali discharges and deletions of all real and personal property searrity held by the Bank of Nova Scotia which are to be discharged forthwith following dosing;

(v) a certificate indicating that the assets of the Owner and the Borrower are not secured to any persons as of the closing date save and except those listed in Schedule "B" attadled;

(vi) any and all other documentation relating to the First Mortgage and Guarantee as may be reasonably required by the Guarantor; and

(Vii) a covenant from the Borrower and Owner that they will not permit any further encumbrances, liens, registrations or any other charges against the Property or personal property of the Borrower and the Owner without first obtaining the written consent of the Guarantor which may be withheld; and

The Owner and the B o m r certify that the foregoing recitals are tiue and acknowledge that the Guarantor is relying thereon.

NOW THEREFORE THIS AGREEMENT WITNESSETH in consideration of the premises and of the mutual covenants and agreements herehailer contained, the parties hereto hereby agree as follows:

D.

1. Guarantofs Guarantee ofTheatm Loan

Subject to compliance by the Owner and the Borrower with the requirements of the Guarantor refelTed to in Recital C above, the Guarantor agrees to execute and deliirthe Guarantee to the Lender in form satiictory to the Guarantor and the Lender.

2. Repayment of BNS Indebtedness

Forthwith following the delivery of the Guarantee as aforesaid, the Borrower and the Owner covenant and agree with the Guarantor to utilize the proceeds of the Libro Loan to fully pay out and discharge the BNS Indebtedness. The Owner and the Borrower further covenant and agree to forthwith request in writing that the Bank of Nova Scotia register good and valid discharges and deletions of all registrations made under the Personal Propem Security Act (Ontario) in favour of the Bank of Nova Scotia and to promptly and diliintly follanr up with the Bank of Nova Scotia as to the status ofthe foqioitq discharges arid deletions and to prov ide evidence thereof upon receipt of same to the Guarantor and the Lender

Compliance with the Theatre Loan, Indemnification and Release

The B o m r shall repay the Theatre Loan pursuant to the terms and conditions contained in the Theatre Loan documents and any other subsequent searrity documentation relating to the Theatre Loan p r o W t 0 the BomMler by the Lender.

3.

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The First Mortgage and the GSA shall be collateral security which is collateral to the guarantees, warranties, indemnities, securities and all other terms of this Agreement in consideration of the full $750,000.00 limit of the Guarantee being executed by the Guarantor.

In the event that the Borrower defaults in the observance and/or performance of its obligations to the Lender or defaults in its covenants and all other terms contained in this Agreement, the Guarantor shall provide written nctiCe of the defauk to the Bcmwer and the l3cmwmshall have fifleen (15) days following receipt of such notice to rec t i said default to the satisfaction of the Guarantor. In the absence of satisfactory redification of said default, the Guarantor shall be entiUed to exerdse the rights and remedies available to the Guarantor under the First Mortgage and related standard charge terms as well as being able to appoint a receiverhanager (the "Receiver") to operate the business of the Borrower. Upon appointment, the Receiver shall:

be the imvcmble agent of the Borrower for the collection of all rents, sums and pro& ofthe Earower; be vested of all the powers previously available to. the Borrower and this document shall operate as a power of attorney for the Receiver to act on behalf of the Borrower in relation to any matter; be entitled to reasonable remuneration; not be responsible for any liability on behaif of the Borrower to the Receiver in respect ofthe appointment or any act or omission ofthe Receiver; manage, operate, repair and maintain the Borrower's business and premises and all related equipment, inventoly, real and personal property; and pay out of the proceeds of any winding up of the business the Receiver's remuneration, expenses and costs related to its management, operation, repair and maintenance, payments for any outstanding liabilities, encumbrances, indebtedness, taxes and other expenditures.

0 ) (ii)

(iii) (iv)

(v)

(vi)

In the event the Guarantor andlor the Rece'wr takes possession ofthe premises it is agreed that the debt owing does not merge with the possession.

4. Guarantee

The Owner and Borrower jointly and severally guarantee to the Guarantor that they will make payment to the Lender of all debts, liabilities, and all other obligations in accordance with the tens of the Libro Loan. The Owner and Borrower agree that their responsibility hereunder will not be affected by any extension period, settlement, transaction or change in the terms ofthe Libro Loan granted to the Borrower.

5. indemnity

In consideration of the-provision of the Guarantee by the Guarantor, the Borrower and Owner undertake and agree to save harmless and keep indemnified the Guarantor of and from any and all claims, costs, including all legal, appraisal and accounting costs, disputes or actions arising as a consequence of any inaccuracy in its reporting requirements or breach of its obligations, including any event of default as set out in the loan documentation pertaining to the Libro Loan, default of any of the terms and obligations set out in the Agreement herein, any action by the Borrower or the Owner that would cause the Guarantor to default under any ofthe requirements set out in the Guarantee or any action by the Lender against the Guarantor in relation to the

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Guarantee.

The parties agree that the discharge of the First Mortgage by the Guarantor will be effected concurrently with, and not before, the Guarantor being released from the Guarantee by the Lender and any other security doarmentation ancillarythereto.

6. ERective Date

This Agreement shall take effect on the date first wilten above (the "Effective Date").

7. Representations, Warranties and Covenants

The Owner and the Borrower represent and warrant to and covenant with the Guarantor and confirm that the Guarantor is relying upon the accuracy of such representations, warranties and covenants and upon the performance of each and every one' of such covenants in connection with this transaction that

the Owner has good and marketable title to the Property free and clear of any mortgages, charges or encumbrances of any kind, except as may be agreed to in writing by the Guarantor, save and except for the Mortgage to the Bank of Nova Scotia registered as instrument number ER613724 to be discharged, the Mortgage of The Corporation of the City of London registered as instrument number ER88116 to be discharged, at the expense of the Borrower, on or shortly after closing and advance of the Libro Loan. The Guarantor acknowledges that the First Mortgage and a second mortgage in favour of the Lender in connection with the Foundation Loan shall be registered against the Property on closing of the transaction contemplated in this Agreement;

without the prior written approval, which may be withheld arbitrarily, of the municipal cwml of the Guarantw, the Owner and the Emmer undertake not to substantially change their financial position, including the entering into of any other secured loans or the increase of any secured indebtedness nor shall they permt registration of any liens or encumbrances, as of the Effective Date whether with the Lender or any other person, save and except for any amounts under $30,~.00 or any amounts set out in the Mdget and approved in writing by the Guarantor;

the Owner arid the Emmer undertake that they will prwide the Guarantor with additional operational and financial information that the Guarantor may request from time to time; and

the representations and warranties in this paragriph are b w and amrate arid not misleading in any material respect at and as ofthe ERective Date.

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a. Reporting

Upon request in writing and at its own expense, the Borrower and the Owner will forthwith provide to the Guarantor the following:

a direction to the Lender advising them to forward a copy of all reports to be fotwarded to the Borrower and/or the Owner including but not limited to monthly statements. In the event that the Lender does not provide copies of all reports as requested by the Guarantor, the Borrower andlor the Owner as the case may be agree to provide the information to the Guarantor as requested.

a copy of the last three years of audited finanaal statements for the Borrower and any other assodated company, along with dsdosure of any mawernent letters provided by their external auditors. Such reports to be prepared in accordance with generally accepted accounting principles and to be in a form satisfactory to the Guarantor;

full access to the minutes for both boards of directors, public and in camera if such a distinction &, as well as any other records of the corporation(s) the Guarantor chooses to review at any reasonable time;

dsdosure of any re@ that a reasonable person might assume the Guarantor would want to review if the Guarantor knew of its existence;

immediately upon receipt by the Borrower and the Owner from the party providing the statement, a copy of the Borrowel's and the Owneh operating and capital budgets of the corporation@), quartelly financial statements, pro forma budgets for the following two years, cash flow projections for the current year, annual audited financial statements, quarterly operating statements compared to budget and trial balances no later than 30 days following the end of each quarter to be prepared in accordance with generally accepted accounting principles and in a form satisfactory to the Guarantor;

an annual witten update concerning the condition ofthe building@) and a copy of any recent survey(s). At the sole discretion of the Guarantor acting reasonably in the determination that insufficient funds are being used for capital repairs and replacements, the Borrower shall establish a reserve level to be determined by the Guarantor for future capital repairs and replacements;

a copy of all contracts signed for Mure fiswl years and a written explanation of how these contracts compare with the projections already provided as requested above;

an annual report to the Community and protective Services Committee (date and content to be determined by the Guarantor acting reasonably);

a Ma l opinion ofthe solicitor forthe Borrower and the Owner addressed to the Guarantor and McKenzie Lake Lawyers LLP as to the validw of all corporate resolutions approving and authorizing the appmpriate officers to sign the agreement herein, the Libro Loan d o c u m ' ,the First Mortgage documents and any other related seourity documentation.

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9.

I O .

11.

Failure to perform any of the reporting requirements or provide required documents as set out above shall be considered an event of default by the Borrower.

General Security Agreement

The Owner and B o m r agree to execute a general security agreement in favour of the Guarantor prior to closing. The Borrower and Owner agree to a Financing Statement under the Petsonal Property Security Act being registered upon or subsequent to closing.

Insurance

The Owner and the Borrower shall provide evidence of appropriate insurance coverage as determined by the Guaranfor.

(a) EntireAgreement

This agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, expressed or implied, with resped to the subject matter hereof.

(b) Amendment

No modscation or amendment to this agreement may be made unless agreed to by the parties hereto in writing.

(c) Time

Time shall be of the essence ofthis agreement.

(d) F u r t h e r Assu rances

The Owner and the’ Borrower agree that at any time and from time to time after the Effective Date, the Owner arid the Bonmverwill, upon the request ofthe Guarantor, and at the expense ofthe Borrower, do, execute, acknowledge and deliver or cause to be done, executed, acknowled ed and delivered all such further acts as may be required for the better canying out and pd’ormance of all the terms ofthis Agreement.

(e) G o v e r n i n g L a w

This Agreement shall be governed by and conshued in accordance with the laws ofthe Province of Ontario.

( f ) C o u n t e r p a r t s

This Agreement may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute but one and the same instrument.

cL~rt--z14419. I

(g) Notices

Any notice, consent, communication, request, demand or other instrument required or permitted to be given or sent or delivered pursuant to any provision ofthis agreement shall be in writing and may be given by delivering, mailing by prepaid registered mail or by sending the same by telegram, telex, telecommunication or other similar form of communication, in each case addressed to:

in the case of the Bomwer and the Owner: 471 Richmond Street London, Ontario N5Z lM7 Attention: President

with a copy to:

471 Richmond Street London, Ontario N5Z 1M7 Attention: Executive Director

in the case ofthe Guarantor: Cit Hall 3d Dufferin Avenue London, Ontario N6A 4L9 Attention: City Clerk and City Solicitor,

Any notice, consent, communication, request, demand or other instrument. if deliired, shall be deemed to have been given on the day on which it was delivered and, if sent by telegram, telegraph, telecommunications or other similar form of communication, shall be deemed to have been given on the next business day following the day on which it was so sent, and if mailed, shall be deemed to have been given or made on the 4th business day following the day on which it was mailed. Any party may give written notice to the other party of the change of address in the same manner in which any notice shall be given and any notice to that party thereafter shall be given to it as above provided at such changed address.

(h) Covenants Joint and Several

N covenants of the Owner and the B o m r herein are joint and several.

(i) Benefit and Binding Nature of this Agreement

This Agreement shall enure to the beneffi of and be binding upon the parties hereto and their respective successors and assigns but shall not be assignable by any of the parties hereto without the prior written consent of the other parties hereto.

IN WITNESS WHEREOF, this Agreement has been fully executed on the date first set forth above.

GRANDMEATRE THE GRAND MEATRE FOUNDATION

Per: Franco Paron, President Per: Gerald Slemko, President

Per: Deb Harvey, Executive Director We have authority to bird the Colporation.

Per: Deb Hatvey, Executive Director We have authority to bind the Corporation.

'

M E CORPORATION OF THE CITY OF LONDON

Per: Anne Marie DeCiccc-Be& Mayor

Per: Catharine Saunders, City Clerk We have authority to bind the Corporation.

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I PmPernes I

Descr(pW Pl LTS 11.12 6 A L L L T 13N FULLARTON ST P V W 6 1 O A S I N W n 8 7 . Pl LT li PLAN 1 7 1 O AS IN W 7 6 3 P l LTS 10 6 11 PLAN 1 7 1 0 AS IN W-13 EXCEPT

Addnrra 477 RICHMOND STREET LONDdN

I ChuMsJ 1

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SCHEDULE “B”

LEASES

Eauipment Lessor Eauipment Lessee

O,CE Imagetics, also knanrn Grad Theatre 3s OCE lmagistics

De Lage Landen Grad Theatre

MacMaster Chevrolet Oldsmobile Ltd. The Grand Theatre

Secured Party - Debtor

Bank of Nova Scotia :to be discharged)

Libro Credit Union Limited

The Grand Theatre Foundation

The Grand Theatre Foundation and The Grand Theatre

Eauipment

Photocopiers

Dgitd MailedPrinter

2010 Chevrdet HHR having VIN 3GNBMDB7as574328

2010 Chevrdet Express Cargo VIN 1 GCZGFMQAI 100896

Collateral

Inventory, Equipment, Accounts Other, NbtorVehicle Included

Inventory, Equipment, Accounb, Other. MotorVehicle Included

2517177.1

FINANCIAL GROUP

Guarantee and Postponement of Claim TO: LlRRO CREDIT UNION LIMITED (hereinafter called 'Libro")

In consideration of Libro making or continuing to make advances or otherwise giving credit to To be initialled by the wimers md the GUarmt0r. Grnnd Thentre

Owner Number 2102879 mereinafter called the "Borrower")

The Corporation of the City of London (hereinafter called tbe "Guarantor")

hereby guarantees the due payment and discharge ofthe Borroner's indebtedness to Libro now or heleafter incurred on all accounts of the Borrower with Libro, whether solely or on joint account or in partnership and ofthe Borrower's liability to Libro whether as p k i p a l or surety; including without limitation thereto, the repayment of all moneys advanced or which may be advanced by Libro to me Borrower or to others onthe faith or paper ofthe Borrower, all liabilities direct or indirect to which Libro may become sajject as a result of making advances to or dealing with the Borrower, the due payment of all monies whim are now or may at my time hereafter become due or owing drectly or indirectly fian the Borrower to Libro on me ultimate balance of such acwunts or liabilities whether absollte or contingent and all interest, commissions, costs (including legal fees), charges and expenses tha may be incurred by Libro respecting slch advances, liabilities, ultimate balance or any security therefor, ard the Guarantor agrees to the following terms and conditions:

To be initidled by I , the witoes and he

T h e liability of the Guarmtor hereunder shall be limited to the sum of. Guarantor. where the Eull liability of fie Borrower is to be secured, rule out the Words '%@fed 2. 10 the sym ofLdoum" and add the word "unlimited."

~ ~ .-..- Seven Hundred and Fifty Thousand ($750,000)--.------ dollars

and shall bear interest from the date of demand for payment as hereinafter provided.

If more than one Guarantor executes this Guarantee the provisions hereof shall be read with all necessary grammatical changes, each reference to the Guarantor shall include each and every one ofthe undersigned severally, and this Guarantee and all w v e n m and agreements herein contained shall be deemed to h v e been made by the undersigned jointly and severally

Libro may compound with or grant extensions of time or other indulgence n the Borrower or with or to any person or persons liable to Libro for the indebtedness and liability hereby guaranteed or any part thereof, take and give up security, accept compositions, grant releases and discharges and Otherwise deal with the Borrower, with other parties and with security as Libm may see fit. Libro may apply all monejs received from the Borrower or others, or from security, upon such part of the Borrower's indebtedness and liability to Libro as it may think best, without prejudice to and without in any way limiting or lessening the liability of the Guarmor under this Guarantee.

Neither the failure of Libro to take any security that the Guarantor contemplated it would take nor the failure of Libro to perfect any security shall prejudice, or in any way limit or lessen the liability of the Guarmtor under this Guarantee. The Guarantor expressly waives presentment, demand, notice of dishonour, protest and all other notices whatsoever a? well as diligence in collection orprotection of or realizationupon all or any ofthe Borrower's indebtedness and liability to Libro or any obligationhereunder or any securityfor any of tk foregoing.

No loss of or in respect of security received by Libro from the Borrower or any other person, whether ocrasioned through the fault of Libm or otherwise, shall disrharge pro tanto, limit or lessen the liability of the Guarmtor under this Guarantee. Neither Libro nor any of itsdirectors, officers, employees or agents shall beresponsible in negligence for any act &en or omitted to be tnken by Libro or any ofthem in connection with any such security.

This Guarantee shall be binding on the Guarantor as a continuing guarantee in that it shall remain operitive and binding notwithstanding the settlement oftheBorrowefs indebtedness and liability to Libro at any time or times or any payment from time to time made to Libro respecting such indebtedness and liability ard notwithstanding whether my other person or corporaion now or hereafter liable toLibro for the indebtedness and liability, in whole or in part, ofthe Borrower to Libro shall cease tobe so liable whether by slease from such liability by Libro or by operation of law. Provided ttut the Guarantor or the executors, administrators or successors of the Guarmtor may determine ttriher liability under this Guarantee (except for the ndebtedness and liability of the Borrower to Libro arising out of requirements of the Borrower based on agreements express or impliedmade before the receipt by Libro ofthe writtennotice hereinafter mernioned) for moneys advanced to the Borrower or to others on the faith of the Borrower's paper after the Guarantor or the executors, dministrators or successors of the Guarantor shall have givento Libro Written notice of such determination.

This Guarantee shall not be determined or affected or Libro's rig& prejudiced by the determination of this Guarantee as to one or more other Guarantors or by the death or loss or diminution of capacity of any other marantor or by any chmge in the name, business, borrowership, board of directors, powers, objects, organization or management ofthe Borrower, it being understood that where the Borrower is a partnership or corporation this Guarantee is to extend to the person or persons or corporation for the time being and from time to time carrying onthe business now carried on by the Borrower notwahstanding any change in the name or borrowership of the Borrower if a partnership or, if a corporation, any change in the name ofthe Borrower or its re-organization or its amalgamation with another or others or tbe sale of disposal of is business in whole or in part to another or others.

Libro, where the Borrower is a corporation or a partnership, shall not be concerned to enquire into the powers of the Borrower or the authority of its directors, partners or agents acting or purporting to act in the exercise thereof, and moneys, advances, renewals or credits thereby borrowed or obtained from Libro shall be deemed 0 form part ofthe indebtedness and liability hereby guaranteed even thagh such borrowing or obtaining was irregularly, fraudulently, defectively or without authority efkcted notwithstanding that Libm has specific notice of the powers of the Borrower or of the authority of its directors, partners or agents. Any amoun which may not be recoverable from the Guarador on the basis of a guarantee by reason of any legallimitation, disability or incapacity on or of the Borrowa shall nevertheless be remverable from the Guarantor as principal debtor in respect thereof. For purposes of this Guarantee, the indebtedness and liability of the Borrower shall include every obligation of the Borrower to Libro notwitlstanding any right or power ofthe Borrrmer or anyone el= to assert any claimor defence respecting the invalidity or unenforceatility of any sum obligaion, and no such claim or defence shall impair or affect the liability hereunder of the Gumtor .

The statement to the Guarantor in writing of the indebtedness and liability ofthe Borrower to Libro by the marager or acting manager at the time such statement is given at the branch where the Borrower's acwunt is kept shall be binding and conclusive, absent manifest error, and all right to question in any way Libro's present or fubre method of dealing with the Borrower or any dealing withany personor persons now or hereafter liable to Libro for the indebtedness and liability hereby guaranteed or my part thereofor with any security now CR hereafter held by Libm or with any goods or property covaed by such security are hereby waived. The Guarantor hereby renounces all benefitsof discussion and division, and Libro shall not be bound to exhaust its r e w m against the Borrower or other person or persons or the semrity Libm may hold nor to value such security before requiring orbeing entitled to payment from the Guarmtor.

Should Libro receive from the Guaratior any payment orpayments either in full or on account ofthe G u m t o t s liability under this Guarantee, the Guarantor shall not be entitled to any security, or a hare therein, held by Libro to secure payment of theRorrowets ultimate balance outsmding with Libm nor to claim reimbursement against the Borrower until Libro's claimagainst the Borrower has been paid in full Notwithstanding payment ofthe Guarantor's liability under this Guarantee, the Guarantor will not call on Libro tosue the Borrower respecting the indebtedness and liability guaranteed hereunder nor will the Guara~tor sue the Borrower in the name of Libm on account of such indebtedness and liability. In case of any liquidation, winding-up or bankruptcy of any other Guarantor or he Borrower, or in the event that the Borrower shall make a sale of any of he Borrower's asset3 within the bulk transfer pmvisim of any applicable legislation, or in the case of any cornpasition with creditors or scheme of arrangement, Libro sMl have the right to I& for its full claim and receive all dividerds or other

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nts m respect thereof until i t s claim has been paid in full; any and all right to prove and rank for Obligations (hereinafter defmed) or any paid by the Guarantor under this Guarantee and io receive h e full amoullt of all dividends or payments in respect thereto being hereby d and transferred to Libro, and the Guarantor shall continue liable up to the amount guaranteed, less any payments made by the tor. for w v balance which may be owine to Libro bv the Borrouer. In the event o f the valuation bv Libro of anv o f i ts securitv andlor the

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- rctcntionthercofbg Ltbro. such \alur ion and or retenuul ,hall no< as bctuccn Libra and the t iwanlor. be :dnsiJcred as a purchase ofsuch se;uriry, or ~r pa) mcnt, ratisfaalon .n reduction ofhs Bonoser s !ndebieJness and Iiabil,~) io I. ihro

The Guarantor shall he ltablc 10 make pa) men1 10 LibiJ Jn account of the indebtedncss and Itabilil) ofthe Bonouer 10 Lihro uiihdut pnor Jemmd therefor by hh ro from the (Narantor anJ Llbrn ma! \titham demand or n~11;c of an) knJ e an) time \then an) m o u l t ,hall bedue and pa) &Is hereunder h! the Guarmor to I ibro appropnate and appl! 10 the ndebtednesc and Iiabilit) hcreb) @arantccd (and in such order of application as Lib13 ma! from time lo lime eleci) m) propen), balan<es.crcdis. acc~untc or moneys ofthe Guarmor in the pus,ession or zunu.d o i L ibro k r an) purpow A demanl hereunder. i f made, ,hall he deemed to haw hzcn made when m en\clope contaning the demand and addrescd 13 thc Guarantor at thc 1st addre,> dl the Giiarantor k n w n 10 Lihr, I s Jspostted, pmage prepad anJ registemd, in the Post OrEx Thr I i t b d q hr.reundcrufthu Guaranta shall hsar interest ri.m the dais .,is.tch demand ill Ihc rate JI rata pa!ablr b) the Uonowa to Lib,\, an the ndehtednes, and Iiabilin uf the Uorri,acr ta Ltbrd

.A11 debs n d Iiabiltiie\ .,I the 11.moar.r to ihc Gua&mtdr, preseni a d f u u e tthc ' IObliga~ons ,,arc hereh) po%rponcd m d wborJmatcd to the mdrbicdness a d Iiabilit) 01 the Bomiwr to Libro and all mdncyr rcceneJ h) the Guarantor riom the Bmoner or for the account ofthe R.m.,ucr respecting the Ohltganons ,hall be r e c w e d i n tnb i I>, L i b n m J f.mhuirh up.," such rcceipi paid io Librn una1 the Bonowr, indthtedness anJ liabilir) I\> Libro 31c full) paid MJ raiisiwd all etthtiu prtj:~uJic? 1.) and uilhaul in an) way limmng or lessening the Itabilir) of the Guwmt,,r IO L ~ b r d lndcr this G~aranter. F w e p with the wrmcn consent .,f I.ibro, ~r uni l such tnJebteJness m d Iiabili? are fully pad anJ sausfisd, the Guarantor shall not rdease, Jxharge. %%grL pledgc or in an! other minncr u hauoevcr cwrcise an) right rcspecong or deal with an! o r a11 s i t h ? Obligstonc and the Guarantor ,hall make, eiccute ad delirer such iunher and other awranies and do all maien and lhtnga which Ltbrd deems newssary u advisablr for theprotection o f its righis under and by w l u e ofthts postponement and subordineion. And the Guarmtor hereb) declrtm that no securit! has been tAen hum h c Uoffiucr b) the Guarmor iJr the gwng ofthis Guarantee and a g m s not tu take an! w h cecmn. so long as ths Guarantor > Iiabiltr) hereunder remainsoutnanding \itthout first obtaning the \\?men conccnt JfLibro, and, in the e v ~ n t ha the Guarantor Jucs lake such recunr), the Guarantdr fmher agrees h t . t ithe guarantor'^ Ihabilq IS IimiteJ under h s GU.WIIC~. thc amount to which such 1iab~110. i s limned shall be deemed tu be increased b! an anouni equal 10 h e value ofsuchsecunty up to \\ha would be the amount dfthe GusmtJr s Iiabilit! hcreundcr hut for the UAmg oisuch secunt)

This (iuarrntce IS given in addition 10 and without prejudice 10 an) sccuril? ofan) Lnd, dudin,! an) guarantee, \rhcther or not n the same tbrm as this (iuarantee now or h e r d e r held b! Libm The Irabclin .,ftheGuarwtor under my otherguarniee c.xecuteJ b! the Guaranior md given to Libru ~ n c o ~ e c l i ( m nith h e indchtedne,, or liabtliq ofthe Ronauer 10 Lihrn shall not alfect or be aflected b) this Guarantee nor shall thls Guarantee atied or be affestcd b) the endorsemrni by the (idarmor 01 an! note or notesofthc Bonoscr, the mention being that the lidhilir) oithc Guarmor under such ather g u m i c e or endarwncnt a d this Guarantee shall be wmulatne m d shall he m d remain in full force anJ eflect

lherc arc no represenmons, collaternl agreements or cdnditims uith respect io thh Guarantee, or aflcctmg thc Guarantar s Iiabhr) hcreundcr. other than those cdmained herein No alterauon or ua\'er oithis Guarmtec or oian) d i t s rems Jr cmdittrms shall be bmJing on Ltbro lnless m d e in artttng o\cr the slgature ofm olfcer ofLihro cxprcssC authdriad io mdx such alrcrauon or give such nancr

Libro ma! uithaut nouce ofm! kind aell. assign 01 transfer ti1 n) third pan! all or any o f t h e Bdnouers indcbtedness and Iiabilir) IJ Libro, and in such event sa& and e \ e n immrdiaie and succcssne &s.gnee, rmsfcree x hddcr of all JI any of,u;h ~ndcbtcdn~ss and Iiabilir) shall hs\c the right to enforce this Guarantee b) suit or othcntisc ior !he benefitof such assignee. urnifem or holder as tull! as i f swh assignee, nan,t'eree or holder uere herein b! rime speaicall! g n m win right<, p o ~ e n and bentfib, hut Libro ,hall haw an unimpaired right. prior and superior to ihar of an) such assignee, uansfcree s i r holder, u enforce this Gwantrc as 10 FJ much of su;h indebtedness and liability as Libro ma) not have sold, asngned or transfencd

No delay on he pan o f I . i h ~n the exerase of any right or remedy ,hall w r a t d as a waver thereof, ad no parlial exercise by hb ro ofan) right or rcmed) shall prc;ludc he funher exercise thereof or the exercise ofany other right or remnl) An aflion permincd hereunder, but not taken b) Lib,.,. shall n d m an) WI) impiur 01 affect this t i u m t e e

The terms and conditions set I)U in thir tiuxanter shall not merge uiIh anv judgement uhch may be obmincd 3gansi the Guarmor or he Uonower

Thln tiuarmrcc shall be cmsvued In accorkmce uith h e laus ofthe Province ofOntmo The tiuaramor agrees tha an) legal sulf action or praceedingarismg om o for relatingto thi, Guarantee ma) be nstiluted in the counv afOnIario, and the Guarantor hereh) a5ees to acccpt and submit tu the jurisdiitian of the sad wumi, IJ acknowledge thcir cornpelzrrc and 10 be bound h) an? ,hd@mmr lhrreuf Nothing h:rcin shall limit Libro s righ io bring proceeding against the Guarantor elsewhere.

Thls Guarimtce shall extendto and enure to h e benefit of the SUCCCSSOR and assign, of Libro. and shall be binding upon the Guarantor and the hein, s~ccutom. and ahmisoaton or the successon anJ assigns of the Guarantor Cor greater cerlailr), the mceessors and assigns of Libro shall mclude m entity hat IS the product oian amalgamaron of Libro with anoher cntny, and Libro i s hereb) c ~ n s t l ~ t e d the anorne! of the Guarantor to transfer 10 such product i the '"uansferre", ihc benefit of this Guarrntee respectslg an) indebte&ms or Iiabilh? I n the uanrfercc tha ma! he incurred by the Bonowr

Signed, Sealed a d delivered at London, Ontario in the presence of

(Us) Date: Wimess

(l is) Daie: Wimess

The Corporation of the City of London

By: (cis) Date: Witness

IAVC have the Auhority to B h d the Corporation

By: (cis) Date: Wimess

IANe have the Authority to Bind the Corporation

Guarantee & Postponement ofCIaim - Corporate Cl.IEST_214575 I

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